EXHIBIT A

CONSOLIDATED STATEMENT OF EARNINGS – (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

Three Months Ended

Variance

June 30, 2019

July 1, 2018*

$

%

Revenue

$

9,555

$

9,186

$

369

4.0

%

Operating costs and expenses

(8,465)

(8,098)

(367)

Operating earnings

1,090

1,088

2

0.2

%

Interest, net

(119)

(103)

(16)

Other, net

12

(15)

27

Earnings before income tax

983

970

13

1.3

%

Provision for income tax, net

(177)

(184)

7

Net earnings

$

806

$

786

$

20

2.5

%

Earnings per share—basic

$

2.80

$

2.65

$

0.15

5.7

%

Basic weighted average shares outstanding

288.1

296.2

Earnings per share—diluted

$

2.77

$

2.62

$

0.15

5.7

%

Diluted weighted average shares outstanding

290.8

300.1

EXHIBIT B

CONSOLIDATED STATEMENT OF EARNINGS – (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

Six Months Ended

Variance

June 30, 2019

July 1, 2018*

$

%

Revenue

$

18,816

$

16,721

$

2,095

12.5

%

Operating costs and expenses

(16,712)

(14,625)

(2,087)

Operating earnings

2,104

2,096

8

0.4

%

Interest, net

(236)

(130)

(106)

Other, net

30

(36)

66

Earnings before income tax

1,898

1,930

(1.7)

%

Provision for income tax, net

(347)

(345)

(2)

Net earnings

$

1,551

$

1,585

$

(34)

(2.1)

%

Earnings per share—basic

$

5.39

$

5.35

$

0.04

0.7

%

Basic weighted average shares outstanding

288.0

296.3

Earnings per share—diluted

$

5.33

$

5.27

$

0.06

1.1

%

Diluted weighted average shares outstanding

290.8

300.6

EXHIBIT C

REVENUE AND OPERATING EARNINGS BY SEGMENT – (UNAUDITED)

DOLLARS IN MILLIONS

Three Months Ended

Variance

June 30, 2019

July 1, 2018*

$

%

Revenue:

Aerospace

$

2,136

$

1,895

$

241

12.7

%

Combat Systems

1,659

1,534

125

8.1

%

Information Technology

2,158

2,442

(284)

(11.6)

%

Mission Systems

1,277

1,147

130

11.3

%

Marine Systems

2,325

2,168

157

7.2

%

Total

$

9,555

$

9,186

$

369

4.0

%

Operating earnings:

Aerospace

$

331

$

386

$

(55)

(14.2)

%

Combat Systems

242

236

6

2.5

%

Information Technology

154

156

(2)

(1.3)

%

Mission Systems

162

153

9

5.9

%

Marine Systems

197

195

2

1.0

%

Corporate

4

(38)

42

110.5

%

Total

$

1,090

$

1,088

$

2

0.2

%

Operating margin:

Aerospace

15.5

%

20.4

%

Combat Systems

14.6

%

15.4

%

Information Technology

7.1

%

6.4

%

Mission Systems

12.7

%

13.3

%

Marine Systems

8.5

%

9.0

%

Total

11.4

%

11.8

%

EXHIBIT D

REVENUE AND OPERATING EARNINGS BY SEGMENT – (UNAUDITED)

DOLLARS IN MILLIONS

Six Months Ended

Variance

June 30, 2019

July 1, 2018*

$

%

Revenue:

Aerospace

$

4,376

$

3,720

$

656

17.6

%

Combat Systems

3,295

2,974

321

10.8

%

Information Technology

4,327

3,580

747

20.9

%

Mission Systems

2,435

2,245

190

8.5

%

Marine Systems

4,383

4,202

181

4.3

%

Total

$

18,816

$

16,721

$

2,095

12.5

%

Operating earnings:

Aerospace

$

659

$

732

$

(73)

(10.0)

%

Combat Systems

448

460

(12)

(2.6)

%

Information Technology

310

257

53

20.6

%

Mission Systems

310

299

11

3.7

%

Marine Systems

377

379

(2)

(0.5)

%

Corporate

—

(31)

31

100.0

%

Total

$

2,104

$

2,096

$

8

0.4

%

Operating margin:

Aerospace

15.1

%

19.7

%

Combat Systems

13.6

%

15.5

%

Information Technology

7.2

%

7.2

%

Mission Systems

12.7

%

13.3

%

Marine Systems

8.6

%

9.0

%

Total

11.2

%

12.5

%

EXHIBIT E

CONSOLIDATED BALANCE SHEET

DOLLARS IN MILLIONS

(Unaudited)

June 30, 2019

December 31, 2018

ASSETS

Current assets:

Cash and equivalents

$

702

$

963

Accounts receivable

3,673

3,759

Unbilled receivables

7,554

6,576

Inventories

6,480

5,977

Other current assets

1,148

914

Total current assets

19,557

18,189

Noncurrent assets:

Property, plant and equipment, net

4,091

3,978

Intangible assets, net

2,457

2,585

Goodwill

19,662

19,594

Other assets

2,307

1,062

Total noncurrent assets

28,517

27,219

Total assets

$

48,074

$

45,408

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term debt and current portion of long-term debt

$

4,960

$

973

Accounts payable

2,860

3,179

Customer advances and deposits

6,714

7,270

Other current liabilities

3,480

3,317

Total current liabilities

18,014

14,739

Noncurrent liabilities:

Long-term debt

8,975

11,444

Other liabilities

8,208

7,493

Total noncurrent liabilities

17,183

18,937

Shareholders’ equity:

Common stock

482

482

Surplus

2,959

2,946

Retained earnings

30,291

29,326

Treasury stock

(17,379)

(17,244)

Accumulated other comprehensive loss

(3,476)

(3,778)

Total shareholders’ equity

12,877

11,732

Total liabilities and shareholders’ equity

$

48,074

$

45,408

EXHIBIT F

CONSOLIDATED STATEMENT OF CASH FLOWS – (UNAUDITED)

DOLLARS IN MILLIONS

Six Months Ended

June 30, 2019

July 1, 2018

Cash flows from operating activities—continuing operations:

Net earnings

$

1,551

$

1,585

Adjustments to reconcile net earnings to net cash from operating activities:

Depreciation of property, plant and equipment

232

206

Amortization of intangible and finance lease right-of-use assets

183

121

Equity-based compensation expense

72

71

Deferred income tax benefit

(17)

(6)

(Increase) decrease in assets, net of effects of business acquisitions:

Accounts receivable

64

344

Unbilled receivables

(1,074)

(1,030)

Inventories

(556)

(542)

Increase (decrease) in liabilities, net of effects of business acquisitions:

Accounts payable

(301)

(324)

Customer advances and deposits

(607)

(159)

Other, net

(51)

25

Net cash (used) provided by operating activities

(504)

291

Cash flows from investing activities:

Capital expenditures

(362)

(279)

Business acquisitions, net of cash acquired

(17)

(10,039)

Other, net

16

74

Net cash used by investing activities

(363)

(10,244)

Cash flows from financing activities:

Proceeds from commercial paper, net

1,394

2,786

Dividends paid

(563)

(526)

Purchases of common stock

(231)

(436)

Proceeds from fixed-rate notes

—

6,461

Proceeds from floating-rate notes

—

1,000

Repayment of CSRA accounts receivable purchase agreement

—

(450)

Other, net

30

3

Net cash provided by financing activities

630

8,838

Net cash used by discontinued operations

(24)

(6)

Net decrease in cash and equivalents

(261)

(1,121)

Cash and equivalents at beginning of period

963

2,983

Cash and equivalents at end of period

$

702

$

1,862

EXHIBIT G

PRELIMINARY FINANCIAL INFORMATION – (UNAUDITED)

DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS

2019

2018

Second Quarter

Second Quarter

Other Financial Information:

Debt-to-equity (a)

108.2

%

119.0

%

Debt-to-capital (b)

52.0

%

54.3

%

Book value per share (c)

$

44.58

$

40.48

Income tax payments, net

$

360

$

159

Company-sponsored research and development (d)

$

120

$

90

Shares outstanding

288,844,120

296,281,432

Non-GAAP Financial Measures:

2019

2018

Second Quarter

Six Months

Second Quarter

Earnings before interest, taxes, depreciation

and amortization:

Net earnings

$

806

$

1,551

$

786

$

1,585

Interest, net

119

236

103

130

Provision for income tax, net

177

347

184

345

Depreciation of property, plant and equipment

118

232

117

206

Amortization of intangible and finance lease right-of-use assets

92

183

101

121

Earnings before interest, taxes, depreciation

and amortization (e)

$

1,312

$

2,549

$

1,291

$

2,387

Free cash flow from operations:

Net cash provided (used) by operating activities

$

291

$

(504)

$

787

$

291

Capital expenditures

(181)

(362)

(175)

(279)

Free cash flow from operations (f)

$

110

$

(866)

$

612

$

12

(a)

Debt-to-equity ratio is calculated as total debt divided by total equity as of the end of the period.

(b)

Debt-to-capital ratio is calculated as total debt divided by the sum of total debt plus total equity as of the end of the period.

(c)

Book value per share is calculated as total equity divided by total outstanding shares as of the end of the period. 

(d)

Includes independent research and development and Aerospace product-development costs.

(e)

We believe earnings before interest, taxes, depreciation and amortization (EBITDA) is a useful measure for investors because it provides another measure of our profitability and our ability to service our debt. We calculate EBITDA by adding back interest, taxes, depreciation and amortization to net earnings. The most directly comparable GAAP measure to EBITDA is net earnings. 

(f)

We believe free cash flow from operations is a useful measure for investors because it portrays our ability to generate cash from our businesses for purposes such as repaying maturing debt, funding business acquisitions, repurchasing our common stock and paying dividends. We use free cash flow from operations to assess the quality of our earnings and as a key performance measure in evaluating management. The most directly comparable GAAP measure to free cash flow from operations is net cash provided by operating activities.

EXHIBIT H

BACKLOG – (UNAUDITED)

DOLLARS IN MILLIONS

Funded

Unfunded

Total

Backlog

Estimated

Potential

Contract Value*

Total Estimated

Contract

Value

Second Quarter 2019:

Aerospace

$

11,932

$

213

$

12,145

$

2,079

$

14,224

Combat Systems

14,794

438

15,232

4,113

19,345

Information Technology

4,446

4,405

8,851

17,983

26,834

Mission Systems

4,925

258

5,183

6,847

12,030

Marine Systems

18,344

7,899

26,243

3,223

29,466

Total

$

54,441

$

13,213

$

67,654

$

34,245

$

101,899

First Quarter 2019:

Aerospace

$

11,924

$

244

$

12,168

$

2,080

$

14,248

Combat Systems

15,475

515

15,990

4,185

20,175

Information Technology

4,770

3,584

8,354

16,666

25,020

Mission Systems

5,081

234

5,315

7,186

12,501

Marine Systems

19,935

7,446

27,381

3,831

31,212

Total

$

57,185

$

12,023

$

69,208

$

33,948

$

103,156

Second Quarter 2018:

Aerospace

$

12,187

$

157

$

12,344

$

2,282

$

14,626

Combat Systems

16,646

376

17,022

2,840

19,862

Information Technology

4,633

4,576

9,209

18,931

28,140

Mission Systems

4,636

645

5,281

4,287

9,568

Marine Systems

17,310

5,124

22,434

4,333

26,767

Total

$

55,412

$

10,878

$

66,290

$

32,673

$

98,963

*

The estimated potential contract value includes work awarded on unfunded indefinite delivery, indefinite quantity (IDIQ) contracts and unexercised options associated with existing firm contracts, including options and other agreements with existing customers to purchase new aircraft and aircraft services. We recognize options in backlog when the customer exercises the option and establishes a firm order. For IDIQ contracts, we evaluate the amount of funding we expect to receive and include this amount in our estimated potential contract value. The actual amount of funding received in the future may be higher or lower than our estimate of potential contract value.

EXHIBIT I

SECOND QUARTER 2019 SIGNIFICANT ORDERS – (UNAUDITED)

DOLLARS IN MILLIONS

We received the following significant contract awards during the second quarter of 2019:

Combat Systems:

•

$260 from the U.S. Army for munitions production. The program has a maximum potential contract value of $1.6 billion. 

•

$100 for the production of various high-performance warheads. 

•

$60 for the production of control actuator systems for the Excalibur artillery system. 

•

$35 from the Army for various rounds of medium-caliber ammunition. 

•

$25 from the Army to provide systems technical support for Abrams main battle tanks. 

Information Technology:

•

$1 billion from the U.S. Department of State to provide global security engineering and supply chain management services. The program has a maximum potential contract value of over $2 billion. 

•

$360 for several key contracts to provide intelligence services to classified customers. 

•

A contract to provide network monitoring, network engineering and system administration services for the U.S. Air Force. The program has a maximum potential value of approximately $215.

•

$85 from the Centers for Medicare and Medicaid Services (CMS) for cloud hosting support services. 

•

$70 from the CMS to provide hosting, operations and maintenance services for the agency’s Healthcare Integrated General Ledger Accounting System (HIGLAS) application.

•

$50 from the U.S. Navy to provide training and training-related program support.

•

$45 from the CMS for benefits recovery services. The program has a maximum potential contract value of $275.

Mission Systems:

•

$90 to provide maintenance and support services for the United Kingdom’s Bowman tactical communications system. 

•

$80 from the Army for computing and communications equipment under the Common Hardware Systems-5 (CHS-5) program.

•

$80 to provide engineering and support services for the Army’s mobile communications network. 

•

$45 to support the engineering and manufacturing of the Navy’s Air and Missile Defense Radar (AMDR) program. 

•

$35 to build space encryption units for the Air Force.

•

$25 from the Air Force for continued modernization of the global positioning system. 

Marine Systems:

•

$495 from the Navy for submarine industrial base development and expansion in support of the Columbia-class ballistic missile submarine program and the nuclear shipbuilding enterprise. 

•

$270 from the Navy to support the Common Missile Compartment work under joint development for the Navy and the U.K. Royal Navy. 

•

$85 from the Navy for planning yard, engineering and technical support services for in-service nuclear submarines.

•

$55 from the Navy to provide ongoing lead yard services for the Arleigh Burke-class (DDG-51) guided-missile destroyer program.

EXHIBIT J

AEROSPACE SUPPLEMENTAL DATA – (UNAUDITED)

Second Quarter

Six Months

2019

2018

2019

2018

Gulfstream Aircraft Deliveries (units):

Large-cabin aircraft

23

18

50

37

Mid-cabin aircraft

8

8

15

15

Total

31

26

65

52

Pre-owned Aircraft Deliveries (units):

1

1

5

2

Aerospace Book-to-Bill:

Orders*

$

2,198

$

2,291

$

5,329

$

3,736

Revenue (excluding pre-owned aircraft sales)

2,134

1,894

4,332

3,710

Book-to-Bill Ratio

1.03x

1.21x

1.23x

1.01x